Rebels threaten Post Office sale

Michael Heseltine was facing defeat last night over his plans to privatise the Post Office.

The President of the Board of Trade has summoned some of the Tory rebels to a meeting next Tuesday to persuade them to drop their opposition. But the rebels were insisting last night that they would stand firm. About 12 Tory MPs have signed a Commons motion opposing the privatisation of the Royal Mail, despite assurances by Mr Heseltine that rural deliveries would be protected.

The rebels said at least 15 Tory MPs were prepared to vote against a Bill, more than enough to defeat the Government, whose majority is 14.

An informal meeting of Cabinet ministers decided for the second time this week to postpone a decision on whether to proceed until Mr Heseltine and government whips have assessed the strength of a possible rebellion. 'It really is 50:50 on whether we shelve it or not,' a Cabinet source said.

Richard Ryder, the Chief Whip, has reported that the Government could face defeat if it presses ahead. At the meeting there was a consensus in favour of privatisation, but the practical difficulties of getting the Bill through Parliament suggested Mr Heseltine might have to accept defeat.

The Labour Party, the Liberal Democrats and the Ulster Unionists would line up against such a Bill. The Tory rebels share Labour's view that the Post Office should be given commercial freedom within the public sector.

Hugh Dykes, one of the Tory MPs who signed the Commons motion, said: 'Opposition to privatisation in the Tory party remains strong both in the House and outside.'

Some of the rebels have privately said they would settle for a compromise option, proposed in the consultation paper, for 49 per cent of the Royal Mail to be sold off. But ministers regard that option as the worst - it would provoke protests against privatisation without bringing the commercial benefits.

Another of the rebels said: 'I don't oppose privatisation but I have had a big mailbag of letters objecting. I think the Government should pause.'

A Cabinet source said the Government had decided to 'sweet-talk rather than threaten' the rebels. 'We just want to chat to them to see whether they can be persuaded,' the source said.

If privatisation is shelved now, it will almost certainly have to wait until after a general election as the proposal could be too controversial to attempt in the run-up to one.